Adani Wilmar Q2 Results: Volumes Grow 9% Led By Foods, Profit Falls 73%

Adani Wilmar Ltd.'s second quarter profit fell, impacted by multiple headwinds, even as volumes rose led by strong growth in food business.

Consolidated net profit of the owner of the 'Fortune' brand fell 73% on an annual basis to Rs 48.76 crore in the quarter ended September, according to its exchange filing.

Q2 Highlights (YoY)

• Revenue from operations rose 4% to Rs 14,150 crore.

• Operating profit declined 41% to Rs 253.9 crore.

• Margin stood at 1.8% vs 3.2%, impacted by high volatility in edible oil prices, allotment of lower tariff rate quota and rupee depreciation.

• Cost of materials consumed rose 1.5% to Rs 12,222.2 crore. But it is 3.65% lower than the Rs 11,775.5 crore worth of materials consumed in the previous quarter.

• Revenue from edible oil business fell 2% to Rs 11,221 crore, while that from the food and FMCG business grew 53% to Rs 1,015 crore.

• Industry essentials revenue rose 33% to Rs 1,914 crore.

• Edible oil volumes fell 1%, while food and FMCG business volumes grew 41% and industry essentials volume grew 22%.

• Overall, volumes grew 9% to 1.32 million metric tonnes.

The July-September quarter was marred by multiple challenges in terms of consumer demand, especially for edible oil business, amid several macro headwinds in the form of high inflation, rising interest rates, delayed monsoon and tepid rural demand, the company said in a statement.

"Edible oil volumes remained flat due to slow uptick in semi-urban and rural demand," according to the company's investors presentation.

The second quarter, in fact, experienced dual market shocks of high oil prices followed by a steep decline in prices, "Price correction in edible oils also led to de-stocking at distributor level," it said. However, edible oil grew 17% on volumes sequentially, suggesting uptick in demand. The company, however, expects the third quarter to see better demand in edible oils even as the food and FMCG business would continue to lead the growth story driven by festivities and wedding season during October-December.

"The overall performance continues to show an uptrend due to the robust execution of our strategy to grow the Food & FMCG business by driving its penetration through the distribution strength of the edible oil business," said Angshu Mallick, managing director and CEO, Adani Wilmar.

"During the quarter, the volume share of Food & FMCG has gone up to 16% and we expect to take this to 30% over the next few years."

The company continued to gain market share across businesses.

• In edible oil, its market share expanded 30 basis points to 18.5%.

• Fortune Atta' market share touched 4.9% as against 3.9% in the same quarter last year.

• Fortune Basmati and Kohinoor now has a combined market share of 10%, with Fortune's share growing from 5.1% to 8.5%.

On the tariff rate quota, announced by the central government in July 2022 to tame high inflation, Mallick said, that the move put the company into a disadvantageous position, given that the quota share allocated to Adani Wilmar was lower than both its market share and manufacturing capacity. "As a result, cost of sourcing of soyabean oil for us was higher than the competition leading to a disparity in the business."

Shares of Adani Wilmar Ltd. fell 1.65% after the results were announced as against a flat benchmark Nifty 50.